NBA weighs venture with Chinese league

The NBA has been increasingly aggressive in building its overseas business, but
now comes perhaps its most ambitious plan to date: pursuing a joint venture with
the Chinese Basketball Association that would make the organizations partners
in arena development throughout China.

Last year’s China Games pitted the Kings against the Rockets in Shanghai and Beijing.

NBA officials said the venture, which is under discussion and not yet completed,
also would give the NBA involvement in the operating rights to the arenas.

“We aren’t necessarily looking to rebrand the CBA,” said NBA Entertainment
President Adam Silver, who recently returned from China, where he discussed the
venture with CBA officials, “but we’ll help construct arenas with CBA
teams as anchor tenants.”

Silver did not say whether the proposed venture would eventually lead to an NBA-run
league in China, what, if any, U.S. companies would be involved in any arena deals,
or other specifics.

“The strategy is to build a [Chinese] league that is in the best position
to draw fans, sponsors [and] television partners,” Silver said.

“The NBA has made significant progress in China and they are far out ahead
of any other league in the United States,” said Rick Dudley, president and
CEO of Octagon, which recently completed a study of the sports marketplace in
China. “Perhaps the NBA will use local vehicles like Chinese leagues, but
I think that ultimately it’s the NBA brand that they are looking to establish.”

The NBA’s efforts to partner financially with the CBA come after the success
of last year’s China Games, which saw the Sacramento Kings and the Yao Ming-led
Houston Rockets play preseason games in Shanghai and Beijing. NBA Commissioner
David Stern said last week that the league plans to return to China for additional
preseason games in 2006.

While the NBA is looking to expand in China, the 14-team CBA is trying to transform
itself into an elite international league. The CBA currently allows two American
players per franchise and is trying to improve its product, but most cities lack
quality facilities.

Silver said the venture under discussion could include renovations to current
facilities. He did not disclose any involvement with current NBA partners, but
given the strong blue-chip corporate participation in last year’s China Games,
it’s likely the NBA would look to include its partners for future deals in
China.

The NBA isn’t the only sports property looking to expand into China, particularly
in advance of the 2008 Beijing Summer Games. The ATP is holding its Masters Cup
tournament in Shanghai for the next three years, and the NFL wants to play a preseason
game in China, but the NBA is the established leader among properties in developing
its China business efforts.

Separate from the possible facilities venture, the NBA is looking to handle game
production aspects of the basketball competition of the 2008 Olympics, as it did
during the 2004 Games in Athens.

“The NBA is exploding in China and there is the likelihood that there will
be more CBA teams in the future,” said Bruce O’Neil, president of the
United States Basketball Academy, which has been retained by the CBA to help run
its player draft. “Currently, most of the CBA facilities vary in size between
6,000 and 15,000 seats and by our standards are very basic. They are not up to
the standards that you’d see in any major college in America.”

O’Neil said the newest CBA facility, an 8,000-seat venue, was built in Beijing
in 2002. Most of the arenas now are owned by Chinese companies that own the franchises,
with most built about a decade ago.

The business relationship between the NBA and the CBA has been evolving over the
past few years. After the China Games last fall, Reebok entered into a licensing
agreement with the NBA that gives the company the rights to the Chinese market.
In April, the NBA and CBA reached a deal to televise the CBA’s best-of-five-game
championship series on NBA TV using feeds from Chinese broadcasters.

Until the China Games, the NBA’s exposure was limited mainly to broadcast.
The NBA has 20 television, radio and online distribution deals in China.